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tv   Nightly Business Report  PBS  January 12, 2012 6:30pm-7:00pm PST

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>> tom: politics and jobs-- business leaders come to the defense of g.o.p. frontrunner mitt romney's jobs record. >> we think romney's had a pretty good track record. perfect? hell no. but damn good. >> tom: and then, can apple stay ahead of competitors-- and investors' high expectations in 2012? >> we like apple. it's "hold" rated, and we're saying, you know, there is some upside, but the upside is more limited in our view after the significant runs. >> tom: it's "nightly business report" for thursday, january 12. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:
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captioning sponsored by wpbt >> tom: good evening and thanks for joining us. susie is off tonight. signs of spring for the job market. home depot has begun recruiting 70,000 workers to help with its big selling season, springtime. that bright spot comes as more americans filed for first time unemployment benefits last week. that number rose more than expected, to 399,000. it's only the second time it's increased since thanksgiving, suggesting the jobs recovery will continue in fits and starts. jobs are the number one issue this election year. since winning the new hampshire primary tuesday, republican presidential frontrunner mitt romney has come under sharp attack over his jobs record when he ran the private equity firm
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bain capital. today, the u.s. chamber of commerce stepped into the fight. chamber c.e.o. tom donohue called attacks on the candidate, and capitalism, unfair. darren gersh reports from washington. >> reporter: the assault on romney's record as a job creator intensified this week. supporters of newt gingrich launched an attack video called "when mitt romney came to town." >> a group of corporate raiders led by mitt romney. more ruthless than wall street. >> reporter: texas governor rick perry jumped on. >> they're vulture capitalists. >> reporter: the attacks have been so fierce, they prompted tom donohue, the head of the u.s. chamber of commerce, the nation's largest business lobby to defend romney, calling the shots at romney's private equity investments foolish. >> we're disappointed with it. we think it will slow down and think romney has had a pretty good track record. perfect? hell no. but damn good. >> reporter: donohue and the chamber are gearing up for a huge voter education campaign in this election year, defending the role of free enterprise.
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donohue says the american public is with him, pointing to a recent gallup poll that found americans don't like class warfare. but another poll by the pew research center finds two out of three americans see strong conflicts between the rich and the poor. >> how are you going to address the concern that shows up in polls that many people think the playing field is now tilted? >> we're going to address that by showing people how the playing field did in fact get tilted to cause people not to be able to create jobs-- a regulatory explosion. there are more regulations pending right now in health care, dodd frank and e.p.a. and labor than we have in this whole country, and they will shut down huge parts of this economy. >> reporter: the chamber's critics say that's not true. >> the fact that people don't have money in their pockets right now, that's a big problem. yes. but it's not the regulations that are hurting jobs. >> reporter: the chamber might want to start its public
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education campaign with g.o.p. front-runner mitt romney. he promises to brand china a currency manipulator on his first day in office. donohue says it's a bad idea to alienate 1.3 billion consumers. >> and neither is it a good strategy for every candidate in both parties that thinks at some time in a campaign, they have to check the box and say something that they are going to be tough with china. >> reporter: but support for trade with china may be a tough sell in the primary battleground of south carolina. the state's textile industry has lost many jobs to competitors in china. darren gersh, "nightly business report," washington. >> tom: still ahead, a big supply chain lender pulls support to sears' suppliers. we look at the state of short- term business lending. >> in a poor economy, we have always been able to step in and provide financing when other financial sources don't. >> tom: the european economy may be teetering on the edge of recession-- if not in a recession already-- but the
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european central bank is not making cash any cheaper for banks. at least not today. it kept its key lending rate unchanged at 1%. still, the bank's president issued this warning: "substantial downside risks to economic outlook for the euro area continue to exist." instead of lowering interest rates, the european bank wants to see the impact of lending billions to banks in december-- money banks don't have to pay back for three years. for more on the situation in europe and what threat it may pose for the u.s. economy, we turn to mike moran, the senior economist at international bank standard chartered. nice to see you tonight. >> it's great to be with you. >> tom: let me ask you-- if the european central bank is taking a "wyatt kuwait see" approach, does that mean the situation has become more stable in europe? >> i wouldn't say it's been more stable. i think we've seen some signs of improvement, only because of the
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volatility th a year ago, they were over $5, but prices have cratered with a at we saw, the backend of 2011. there's nobility stable about having a greek 10-year bond at 35% yield. clearly, there are still some very, very serious issues facing the europeans, and that has not not been resolved and it may take a long time. i think they want to see what the impact of those long-term funding that you mentioned, the three-year l.t.r.o., to really spread through the economy for another month or two before really making a big decision to say we're going to cut the base rate one more time. clearly i think rates are still heading lower. >> the l.t.r.o., long-term financing operation, finance and banker speak in europe. the worries we saw in the market last fall led to europe agreeing to cover greece's debt for three years if private investors would accept less money. those negotiations continue. could that be a bigger pocket of
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stability than what anything the e.c.b. may do in the weeks ahead? >> well, they really hit a real gridlock in terms of the negotiations, and i don't think anyone is really expect a quick resolution here, but, quite clearly, what we want to see is in a policy, a macropolicy in europe, being more supportive for growth. i mean, growth is really, i think, the idealan slaught to a lot of the issues. manufacture these austerity measures will basically push the economy deeper into recession. when the government-- when the economies are in recession, the debt burden gets worse and worse. it's a really double whammy here. and i expect those negotiation to go on for a while. i think at the moment, the market is a little bit, you know, less concerned about the bank funding issues because they have this liquidity from the e.c.b. that's, i think, what's behind the improvement and sentiment but i think there's still some
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tough decisions. >> tom: let me bring that back. you mentioned growth prospects in europe. we've seen difficult economic numbers in europe but things are look better in the united states. why should americans still keep europe on their radar, if at all? >> well, no doubt about it, the european economy is still a massive contributor to the global economy. inner terms of g.d.p., it rivals the u.s. economy and, you know, distill u.s. exports to euro zone areas still amounts to 14%, 15% of total u.s. exports. so i think american corporates certainly are still look, you know, with great caution how europe really pans out. sadly, the numbers that we've seen over the last month or so, clearly indicate that europe, not just the southern periphery economies, but even germany and france, are showing some very weak growth numbers, and we're looking at the very least a technical recession in some of these core northern economies as
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well. >> tom: mike, we'll leave it there. thanks for the insightes from the desk at standard charrer mike moran. stocks finished slightly higher today, despite weaker-than- expected reports on retail sales and jobless claims. the dow gained 21 points. the nasdaq was up 14. the s&p 500 added three. trading volume remained light-- just 769 million shares on the n.y.s.e. and 1.7 billion on the nasdaq. while some measures reported a strong holiday season for retailing, the final month of the year was a dud according to the commerce department. december retail sales inched up just 0.1%. but target confirmed today one of the hottest retail brands will be coming to 25 of its stores. apple mini-shops will soon be in a handful of targets. the in-store partnership is designed to help apple reach markets where full-sized retail apple locations may not make
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sense. it's hard to imagine that apple needs more venues to sell its popular ipads or mac computers, but as suzanne pratt reports, there are at least some experts who worry apple is in danger of losing its crunch. >> reporter: it doesn't get much brighter than this for apple. the company has just come off what's likely it's best holiday quarter in history, selling more iphones than expected. on top of that, apple stock is trading close to an all-time high and is up 30% since the start of last year. most analysts believe apple's momentum will continue this year. the stock is still a wall street darling, with the average price target at a whopping $510 a share. analyst colin gilis is one of the few who are bit more guarded. he rates the shares a "hold" with a target of 450. >> so apple is going to set all types of records for revenue, for earnings and for phone shipments, which is a big positive for the company.
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but, unfortunately, in terms of the stock price, a lot of this is already priced into the name. >> reporter: 2012 is expected to be a good year for apple products. apple fans are likely to get an ipad 3, an iphone 5 and maybe even apple television. analysts have high hopes for apple tv as a nice new source of revenue. others worry the easy money has already been made at apple. they say the company's high- growth phase is over, particularly because competitors are catching up. amazon's kindle tablet sells for $200, so why pay three times that for an ipad? >> the fast followers are here, and you're seeing people clone and copy apple's innovation pretty rapidly. so, for a company that's used to being in the lead, this is a difficult spot for them to be in. >> reporter: and, then there are those who say apple's problems span beyond the changing competitive landscape. third-party sellers like verizon and sprint are seeing their
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margins squeezed because of the iphone's high price tag. that's bad news for earnings at those cellphone carriers. >> so, if they have the choice of selling an iphone or a competitor's product, which might give them a better margin, they are going to opt for the competitor's product. >> reporter: just one more reason why at least some say this might be the year when the shine comes off the apple. suzanne pratt, "nightly business report," new york. >> tom: with apple dominating the smartphone business, the former leader of the pack is struggling. word today that research in motion has hired goldman sachs to help it explore its options. rimm is the maker of the blackberry devices, once the standard in mobile email devices, but it's run into a series of disappointments. from lackluster sales of its playbook tablet to delaying its newest blackberry line of devices until next year. over the past year, the stock has lost three-quarters of its value, even though it rallied almost 6% today. meanwhile we're also seeing interest in the bankrupt parent
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of american airlines, a-m-r. the company went bust in november, looking to restructure its debt and cut its labor costs. it was the last of the major legacy carriers to declare bankruptcy. reports indicate there are two possible buyers, delta airlines and private equity firm t.p.g. capital. ray neidl is an analyst with calyon securities. welcome back. we should add one more name. late today it broke that us airways may be involved. let's tackle the cariers, dealt and and us airways. any chance any of those get through regulatory scrutiny? >> well, delta thinks they could get through. they've had too much market share. delta and american combined, and you have the problem, also, with the european regulators. american is in the one world, delta-- and they wouldn't want to lose that. british airways would be hurt if
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american left one world. i think the delta situation would be very difficult but we'll see what develops there. >> tom: what's of value for american airlines that these folks like to see? >> it's a good franchise. it just has to get its cost structure down and maybe its fleet modernized. but overall, it's a very valuable franchise with the right cost structure. >> tom: running an airline is very expensive as american has learned, obviously, declaring bankruptcy. does delta or us airways have the capacity to do a purchase like this? >> they co. especially if they brought in an outside investor. in the case of texas pacific, they probably would team up for an ownership management with another airline, most likely us airways. >> tom: what about t.p.g., texas pacific group, the former texas pacific group, what experience does it have running airlines? >> well, it has owneddarilies in the past, and its charlie, i believe, it still involved with
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ryan air. but the thing is, they've made money from airlines in the past as a private equity investor and going in there as a partnership with a soiled management like us airways has, they probably believe they could really up the value of the american airlines franchise. >> tom: the knock on private equity-- and we're seeing this in politics these days-- is that it tend to borrow the money to make purchases. is there any leverage in airlines these days? >> in this case it would be very bad to do leverage. >> tom: a cash deal, you're saying? >> it would be an equity cash deal. that's why if us airways was going to make a bid, i believe they would have to go in with a operate equity investor. >> tom: we should point out because i anticipate the questions from a.m.r. equity shareholders who may still hold the share price, the equity would be wiped out, even if there is a deal, wouldn't it be? >> regardless're regardless it will be wiped out. i don't think anybody will make a bid for a.m.r. until they estimate busins plan and an agreement to bring the cost structure down. >> tom: one of the cost
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structures, of course, is oil. what role does it play in any kind of buyout? >> oil is neutral. it will do what it does. they need to reduce the nonfuel cost. the cost the aircraft, getting rid of older aircraft, and most importantly the big reason that put them in bankruptcy is the labor costes, particularly with the pilots. that has to be addressed. and the employees have to be on board. >> tom: more consolidation in the airline business possibly in the days and weeks ahead. ray, we'll be right back the insight. thanks so much. ray neidl is with us tonight. he is with the maxim group.
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>> tom: stocks rallied despite the inaction out of europe and the weaker jobs and retail sales data here in the u.s. let's get to it in tonight's "market focus." while the disappointing economic data led to some early session stock selling, but by the close this afternoon, all three of the major indices were higher. the gains pushed the s&p 500 closer to a psychological level of 1300. the index is at its highest close tonight since late july. leading the charge today, a familiar trio. materials up 1.5%. the industrial and financial sectors were up more modestly, less than 1% each. but still higher. among the material stocks continuing to rally? aloca. shares gained another 3% today. a move over $10 per share would
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take alcoa to a two-month high. so far this year, alcoa is the second-best dow industrial stock, up more than 14%. second best only to bank of america. meantime, energy was the weakest sector today and chevron was the biggest drag on the dow-- slipped more than 2.5%. as we reported last night, chevron warned its fourth- quarter results will be substantially less than the third quarter. but it's been the big cool-off in natural gas prices that has put pressure on energy drillers and contractors. first, here's natural gas futures-- only last week they were above $3. a year ago, they were over $5, tonight at 2.75, prices have cratered with a warm winter so far, and record high nat gas supplies. an energy analyst with simmons and company thinks prices will go below $2 this year. they're at a 28-month low tonight. companies drilling for nat gas are dropping. helmerich payne down 4.5%. baker hughes and nabors down
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about 4% each. the price drop has also hit natural gas producers. w.p.x. energy, cabot and e.q.t. all dropped to multi-week lows on heavier-than-usual volume today. we saw the uninspiring december retail sales figure earlier-- up just 0.1% in december. we saw some mixed action with retail stocks. higher-end retailer williams- sonoma cuts its guidance after looking through its holiday receipts and seeing more discounting than expected. so that warning sent shares down 12% on heavy volume. dicks sporting goods narrowed its outlook, blaming the weather, but it also announced a stock buyback plan of up to $200 million. that buyback plan sent shares up 12.5%. and you probably have heard about the strong agriculture economy. the nation's biggest farm and ranch retailer, tractor supply, predicted its profits will be slightly better than anticipated.
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that helped push the stock up 10% to a new 52-week high. one more retailer-- sears-- has had a tough 2012, and it was dealt another blow today. lender c.i.t. group pulled loans to sears suppliers while they await payment from the company. that practice is called factoring. sears said c.i.t. financed only about 5% of the retailer's inventory. that reassurance may have helped sears stock today. after dropping at the opening bell, it ended higher by more than 3%. the company owns both sears and k-mart. earlier this month, after reporting weak holiday sales, the company announced it would close up to 120 stores. >> tom: more on this practice called "factoring." it's an old financing practice. with c.i.t group pulling the plug on sears suppliers, is the business lending environment drying up, or is it an issue specific to sears?
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>> you look at the other retailers they've been stagnant in a tough economy but they've been pulling through. competitors such as home depot and lowes are making it. >> tom: that's jon anselma.. of paragon financial, a lender specializing in factoring. that's lending money to a supplier while that supplier waits to get paid. he works with about 90 small- to mid-size firms and says balance sheets are still weak. >> many companies have suffered losses the past few years, stagnant growth, and due to that their balance sheets have weakened, and therefore they're unable to get traditional bank financing, however factoring companies are still a good source, since they're reliant on not just their balance sheet but really just the accounts receivables for their monies. factoring was founded in the u.s. garment business decades ago, as cash-rich financiers funded garment makers with money needed to make goods for sale to a retailer in exchange for a portion of the proceeds from that sale.
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here's what we're watching for tomorrow: we'll get the latest on international trade, with december's import-export numbers, and j.p. morgan gets the ball rolling for bank earnings as it reports fourth- quarter results. also tomorrow, our friday "market monitor" guest is a bull. elaine garzarelli joins us with exchange-traded funds she thinks will beat the market this year. some good news about home foreclosures last year: they were down. but not necessarily because the housing market improved. according to realty trac, 1.9 million homes entered foreclosure in 2011. that was down 34% from the previous year. but as real estate experts point out, many foreclosures were simply delayed because of paperwork problems. >> what we saw were artificially low numbers because of regulatory issues, because of procedural and process delays. unfortunately, not because of an improvement in underlying market conditions. so while the year-over-year numbers are down 30%, it doesn't
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mean that the number of foreclosures is getting better. it just means foreclosures have been delayed. >> tom: meantime, for home buyers, money to buy a home as never been this cheap. if you can qualify, the average rate on the 30-year fixed mortgage fell to 3.89% in the past week.
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money can be complicated. just tonight, we've reported on european interest rates, private equity firms and the practice of factoring. but money doesn't have to be incomprehensible. it begins when we're young, from trips to the store to playing store. that brings us to tonight's "kids and cash." here's janet bodnar of "kiplinger's personal finance." >> while you're trying to get your finances off on the right foot this year, why not bring your children along for the ride? teaching kids about money doesn't have to be intimidating or time-consuming. the best way to start is simply to talk with your kids about money and try some age- appropriate activities. with pre-schoolers, for example, you can play "store" to show them that different coins have different values. let them put coins in a vending machine, and play with a fun savings bank. once kids are in elementary school, it's time to start an allowance that comes with financial responsibilities, like paying for their own collectibles or ice cream
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treats. kids will spend unlimited amounts of your money, but it's a whole new ballgame when their cash is on the line. if your kids are in middle school, you can expand the allowance to include things like movie tickets and mall excursions with friends. and if your kids are in high school, help them open a checking account, especially if they have earnings from a job. knowing how to balance a checking account will be a big plus when they head off to college. i'm janet bodnar. >> tom: and finally, a win for brazilian workers. a new labor law there grants workers overtime if they find themselves answering work e- mails on their smart-phones after-hours. the law equates e-mails to workers as the equivalent of orders given directly to an employee. that makes it possible for workers answering e-mails after hours to ask for overtime. let us know what you think about those electronic leashes on facebook-- bizrpt. that's "nightly business report" for thursday, january 12. i'm tom hudson.
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good night everyone. we'll see you online and back here tomorrow night. "nightly business report" is made possible by: captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org 
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